MARKET REPORT: City jitters over William Hill bet

The godfather of bookies currently has more balls in the air than Andy Murray.

Ralph Topping, chief executive of the world’s biggest bookmaker William Hill, faces a crucial week after which he could have agreed to spend a shed load of shareholder’s cash on two major deals.

The shares lost 4.1p to 330.5p after recent strength amid fears that Topping, along with GVC Holdings, will pay too much for Sportingbet, flat at 51p, and a hefty fund-raising could be on the cards.

Crucial week ahead: William Hill could proceed with seizing control of its WHO internet joint venture

The online gambling firm rejected an
initial £350million or 52.5p a share approach and Topping & co now
have until Tuesday to make a firm bid or walk away under UK Takeover
Panel rules.

Whispers yesterday suggested they
will step up to the plate with an increased offer worth at least
£400million or 60p a share. They could be given more time to decide.
Three days later and Topping will roll out third-quarter figures, which
should please.

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He is also expected to reveal whether
or not William Hill is to proceed with seizing control of its WHO
internet joint venture by acquiring the 29 per cent stake held by
Playtech, 3.1p off at 377.9p. That could involve the bookie splashing
out another load of cash making a cash call even more likely.

Operationally, the joint venture with
Playtech to run the bookies’ online operation has been a big success
with double-digit sales growth over the past three years.

But a poor and deteriorating working
relationship between the two partners have led to serious discussions
over the past few months about bringing the partnership to an agreeable
end.

The Playtech board will not sell on the cheap. Analyst Nick Batram at
broker Peel Hunt downgraded William Hill to hold from buy and said it
makes strategic sense for it to acquire the WHO minority. He estimates
that WHO could be worth north of £900million.

Rival bookmaker Ladbrokes, which
once had a good look at Sportingbet before walking away, eased 0.7p to
177.4p ahead of Thursday’s third-quarter trading update.

All bets were off for the Footsie as
it drifted 36.43 points lower to 5,793.32. The FTSE 250, which
celebrated its 20th birthday yesterday, slumped 60.13 points to
11,838.26.

Fund managers remained cautious ahead
of the US third-quarter earnings season which gathers pace next week
with major banks Goldman Sachs and Bank of America/Merrill Lynch
reporting.

Home banks gave a good account of
themselves amid rumours that the implementation of the strict new Basel
III capital rules may be delayed. UK tax-payer banks Lloyds Banking
firmed 0.45p to 39.7p, while Royal Bank of Scotland touched 278p before
closing 2.9p off at 270.9p. Barclays ended 0.45p lower at 232.2p, after
touching 240.35p in early trading.

Basel III, due to be phased in from
next year, requires that all off-balance sheet items have a credit
conversion factor of 100 per cent, instead of providing capital at 10
per cent or 20 per cent such loans will have to be fully capitalised.
This is less profitable for banks.

An Investec recommendation ahead of the third-quarter figures on October
30 lifted Standard Chartered 32p to 1427.5p. Its target price is £18.

After Thursday’s successful market debut when the shares left touched a
high of 189.25p after starting life at 175p, profit-taking left
state-backed insurer Direct Line 1.5p easier at 186.5p.

Hungry punters filled their boots with online grocer Ocado as revived
rumours of a possible bid from Wm Morrison (1.8p off at 267.7p) did the
rounds. The shares raced up to 71p before profit-taking left the close
only 0.35p better at 66.45p.

Engineers were mangled after
industrial materials provider Morgan Crucible plummeted 28.5p to 227.3p
on a profits warning, saying trading conditions have deteriorated across
most geographies, particularly in Europe and China.

Coming hard on the heels of Cookson,
down a further 9p at 530.5p, drastic earnings alert, it raised fears
that others in the sector could be affected.
Components maker GKN reversed 7.1p to 209.9p, while industrial engineer
Bodycote fell 22.9p to 351.3p. Senior shed 7.7p to 187.3p, Spectris 112p to 1549p and Weir 34p to 1728p.

Still reeling from news of the shock
resignation of chief executive and industry veteran Stuart Murray,
Aquarius Platinum lost 2p more to 38.25p.
Europe’s largest regional airline Flybe jumped 3.12p to 53.38p. It has
performed in line with revised guidance in the second quarter and it has
formally signed a contract with Finnair to fly 12 Embraer E190 regional
jets on its behalf.